If a firm's credit period is decreased, the sales volume can be expected to ________, the investment in accounts receivable can be expected to ________, and the bad debt expenses can be expected to ________.
A) increase; decrease; decrease
B) increase; increase; decrease
C) increase; increase; increase
D) decrease; decrease; decrease

Question

Quizplus · Accepted Answer

Decreasing a firm's credit period typically leads to a decrease in sales volume as customers have less time to pay, a decrease in investment in accounts receivable as funds are collected more quickly, and a decrease in bad debt expenses as stricter credit terms often lead to fewer defaults.

If a Firm's Credit Period Is Decreased, the Sales Volume